Today’s European PMI reports have failed to bolster the Pound Sterling to Euro (GBP/EUR) exchange rate in spite of universally poor results.
Euro (EUR) Rallies over Greek Vote with Pound (GBP) Slumping on Retail Sales, GBP/EUR Trends Lower
The threat of an impending Grexit has significantly receded this week after Greek ministers voted in favour of a raft of austerity measures, moving one step closer to securing the nation’s bailout. Backed by 230 votes to 63, the acceptance of these reforms should no doubt ease concerns over the stability of the common currency.
With the Euro seeing a rise across the board in the hours following the result the GBP/EUR pairing was one of the many to suffer, trending steadily downwards from a peak of 1.4304 to hit a low of 1.4086 on Thursday afternoon.
In spite of the positive Bank of England (BoE) meeting minutes on Wednesday the Pound has softened considerably in the latter half of the week following a disappointing showing in retail sales data.
Both the month-on-month and year-on-year figures fell short of predicted levels, at -0.2% rather than 0.4% and 4.0% instead of 4.7% respectively. Running counter to previous optimism in the speed of the UK’s economic recovery, these reports saw the pairing slump further to 1.4140.
Slowing of European Manufacturing Pushes Euro (EUR) Down, Exchange Rate Remains Trending Bearishly
Today’s European PMIs for July were ultimately below expectations, dealing damage to the previously buoyed Euro.
Although all of the figures for Germany and the Eurozone as a whole remained above the neutral baseline of 50, indicating relatively positive conditions, the margin of clearance has undeniably shrunk. The index dropped from 53.7 last month to 53.4 for Germany and from 54.2 to 53.7 for the Eurozone.
Grexit concerns have clearly had a more severe effect than previously predicted, with the usually robust German economy wavering in the face of all the uncertainty.
The UK’s mortgage approval rate for June, on the other hand, has shored up Sterling with a higher result than expected. Instead of the anticipated 43300 the rate hit 44488, rising positively over last month’s figure.
While this does certainly bode well for the Pound’s future prospects, implying a greater level of confidence from UK banks, the GBP/EUR exchange rate at present has not seen a particular resurgence, hitting a peak of 1.4164 before starting to trend downwards once more.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Fluctuations Likely with Upcoming UK GDP Report and Eurozone Figures
A stronger rally may be on the horizon for the Pound, however, with Tuesday’s second quarter GDP report due from the UK. If growth is revealed to be on or above target sentiment seems likely to return to the more hawkish nature of previous days. Another disappointment though could well send rates plunging even further.
Several major releases are also upcoming for the Eurozone, including June Unemployment Rates and year-on-year Consumer Price Indexes as well as German retail sales. Should these equally come in below forecast, the GBP/EUR pairing seems likely to return to a rising trend, although a positive showing may see the Pound consolidate this week’s losses.
Continuing talks with regards to the Greek bailout are also likely to have some degree of impact on the exchange rate, any snags potentially pushing the Euro down again.
The coming week certainly looks set to be a turbulent one for the GBP/EUR pairing.
As of writing the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4145.